ARE YOU A PICKY HOME BUYER????
ARE YOU A PICKY HOMEBUYER????
7 Top Tips to Snag a Home in a Difficult Market…
Picky is OK. I get it. Many of our buyer clients are picky. Some come to us after they have viewed every home on the market and worked with several realtors.
They still desire to buy a home…
I had a buyer like that not long ago. Suzi had been looking for 2 years until a co-worker recommended us after the “wanna-be buyer” lamented about not being able to find a property to buy.
Looking for 2 year is a long time to search, so I did speak with her.
I wanted to learn about the “what” and “why”
Before I commit to helping a buyer I need to know about them. I want to understand what kind of properties a buyer has looked at, made offers on, or lost out on.
Most importantly, I want to know what the buyer is thinking and hoping to buy.
I listen carefully…either the buyer has terrible luck in finding something or they have an agent that is not experienced or maybe they really are just plain unreasonable. My job is to figure out the problem and see if I can put everything back on the right track.
It is rare that I have someone that is so unreasonable that they really cannot commit to a home purchase. More often than not, the biggest problem I find is that no one has given the buyer the right information.
What about Buyer Suzi ?
She did not seem unreasonable…in fact, she was really not asking for that much and she had her financing in order. The most surprising thing about her was that in 2 years of searching for homes, she made “0” offers.
After having a nice conversation with her, I decided I could help her…she was open to try anything…what a great attitude! What a cool lady!
The first thing we did was change areas and revise the search criteria.
Being Picky is OK, but.…
- You cannot buy what does not exist.
- You cannot buy what you cannot afford.
I took her home shopping 3 times and we made 3 offers…the 3rd offer we closed on. So what was the problem?
Originally, she wanted to be in a certain area that was above her budget but no one told her that…no one told her that she needed to look elsewhere in order to get that type of house for her budget.
So she tried and tried again only to find properties that she could not afford, so she kept changing agents hoping they could find the “right” house for her.
Here are my 7 best tips on buying a house in a difficult sellers market:
1. Figure out your Budget. I don’t mean only the amount you qualify for, but rather the monthly expense/payments that you are comfortable with. Interest rates are so low right now that it is easy to qualify for a higher purchase price…but should you?
If you start looking at homes priced above your financial comfort level and then have to lower the purchase price, the houses will then be pale by comparison.
Start with a lower price and then increase the price as you see fit…that may justify you spending more.
2. Evaluate your Wants VS: Needs. Years ago, I was at a Tony Robbins Seminar where he described the happiest person he knew… a janitor. He said that the key to happiness was to LOWER your expectations. I thought that was strange, but it really does make sense.
Bigger is not always better…sometimes buyers will stretch financially to buy a bigger house just for storage of things that they no longer want or need.
Is too much on your “must have” list? Or can you move some things to your “would like to have” list? It is easier to find a house if you stay flexible and broaden your search criteria.
3. Look at homes below your max budget:
Yeah, I know…in Real Estate School, they teach you that buyers can always afford more than they admit…in fact I remember one instructor recommending that the class encourage buyers to borrow additional money from a relative so they can buy a more expensive house!
I recommend staying below your maximum because with the market being such a strong sellers market, your actual costs will be higher than you expect.
Your offer: Almost everything that is being sold in 2021-2022 is going above full price. If you are already at your max budget, you have no room to offer more so that you can beat out the competition. You also have no money left to come up with the appraisal gap in case you have a short appraisal.
4. Get your financing in order…go the distance to getting approved: lets face it, a pre-qualification only means that based on what you claim you can probably qualify for financing. It does not mean that you are actually qualified.
In a state where 50% of home sales are cash, a pre-qualification is a weak statement. Find a good mortgage broker, submit your documents, let them verify your bank accounts, your income, your assets and get approved. That will make a difference in how the seller views your offer.
You don’t want your competition to beat you out of a house over an approval letter that you are able to provide.
5. Put as much money as possible down on your financing…Sellers look at the quality of the financing as much as they consider the offer price. Yes, cash does talk, so if you are financing, you need to look like a strong well-qualified borrower.
Sellers who wait for multiple offers rank them from cash to financing.They then compare how much a person is putting down on their loan. The consensus is that the more money that a buyer puts down on financing a loan the easier it will be for them to actually get a loan.
A 20%-50% Conventional loan will typically beat out any FHA or VA, while a 5% down loan will go to the bottom of the pile of offers.
6. Submit a clean offer…don’t ask for extras if you don’t have to…like closing costs, paint carpet, warranty etc.…even if those requests might not be a lot of money it still just might kill your deal. In today’s hot market, a winning bid where the seller is paying for the buyers closing costs is almost unheard of.
Sure, if there is a house deficiency that will keep you from getting insurance, that's another story and then you can ask for a remedy.
Sellers (and their agents) like simple clean contracts and those contracts win every time. The more you ask for, the more turned off the seller will be. Besides, sellers have a lot going on and they really don’t want to bother with any requests…the seller might even take a lower offer if they think it will be less hassle for them.
7. Be ready to buy…keep an open mind. When viewing a home, see if it may fit your needs. Don’t look at the home to see if you can find the flaws…check to see if it may work for you. Can you picture yourself living there?
Be decisive. Don’t wait till tomorrow…the buyer that looked at it yesterday just made an offer today and tomorrow you will be out of luck.
Submit a decent escrow deposit...at least 2-3% of the purchase price.
Today's real estate market is not “normal”. It is sizzling hot…with unbelievable buyer demand. Right now, inventory is low, prices are climbing and buyers are buying.
Not to mention that many buyers today are pulling out all the stops including waiving contingencies, which is not always the smartest thing for a home buyer to consider…
Helping homebuyers is our business…our ONLY business at Buyers Broker of Florida. Call us 727-202-9130.